How to Protect Yourself Against Predatory Lending

If you’ve ever been desperate for cash and have nowhere to turn, you know how easy it can be to fall prey to loan sharks. Because auto title loans are given to people with bad credit who need cash for an emergency, this market is especially susceptible to devious lending practices.

Many lenders who operate in the subprime market practice what is known as predatory lending. According to consumer groups, predatory lending practices by title loan companies can trap cash-strapped borrowers in long-term debt, and put at risk the family’s vehicle, which is one of their most important assets.

When people are desperate for money, they are more vulnerable, are less likely to read the fine print, and can easily fall prey to predatory lending. With no laws to govern them, most car title lenders, except those in Virginia, operate under the same regulations that govern pawn shop brokers.

Companies that offer auto title loans cater primarily to borrowers with bad credit and they charge higher interest rates than conventional lenders. Since their loans are open-end credit, borrowers are often forced to pay exorbitant triple-digit interest rates and end up agreeing to unreasonable loan terms that lead to unfair treatment.

Besides hidden fees and rigid terms, borrowers could end up paying a balloon payment at the end of term. If the loan is not repaid within a month, lenders could roll it over into a new agreement and charge additional fees and even higher interest rates. Some companies charge pre-payment penalties that prevent borrowers from repaying the debt before time to save on interest payments.

To ensure that you do not fall prey to such devious lenders, it’s important to know your rights, and to understand the industry standards and the applicable laws. To protect yourself and your vehicle from predatory lenders, the first thing to do is to be better informed about the auto title loan industry and compare different lending companies.

Interest rates on auto title loans can fluctuate wildly between lenders within the industry. So you need to compare the interest rates offered and fully understand the annual rate of interest you will be paying. You can do this by carefully reading the legal disclosure section of the loan agreement.

Avoid predatory lenders who use aggressive tactics to pressure you into signing agreements that impose rigid terms that are difficult to live up to. Look for a lender that offers flexible term options. This will give you more latitude for repayment, and makes it less likely that you will get into a situation where you could lose your car title and have it repossessed.

To help defend consumers from predatory lending practices some states have passed laws. The law in Oregon prohibits a lender from holding the keys of a borrower’s car while the loan is being repaid. This prevents the lender from repossessing a vehicle without first exhausting all other options to claim payment.

Read the agreement of auto title loans before you sign it to ensure that you have the right to take legal action if your consumer rights are violated. When in doubt, take legal advice to ensure you do not fall into a debt trap.

 

An Auto Title Loan in Phoenix is based on Qualifications

Are you going to head to an auto title loan lender for extra cash in Phoenix, AZ? Is the cash a necessity or for something extra like taking your family to the Phoenix Zoo or maybe going on a fun trip to the Desert Botanical Garden? The title loan lender is not going to stop and ask those kinds of questions, it is not a loan requirement. Banks and credit unions will want this information, as their process is much different.Phoenix-Skyline

What you will use the money for or why you need it so urgently are not questions which apply to an auto title lender. There are no intrusive questions which apply to the cause of the financial emergency. What a title lender wants to know is based around the payoff. Because these lenders work with what are normally “riskier” applicants, the payoff is the focus for the application.

  • What condition is the car in? Since the title loan is secured with the title to your vehicle, the value of the vehicle is extremely important and an evaluation will be done by lender provided appraiser. The auto title loan lender will need your vehicle on the premises in order to process the application.
  • Do you own the title clear out? Bring the title with you. Your title will not work if it belongs to another party or if there is a lien placed on it. The title lender needs to protect their interest since this is their only way to collect if the loan goes into default.
  • Do you have your Arizona driver’s license with you? There are many factors which relate to this qualification. The photo ID lets the lender know who they are working with and that it matches the owner listed on the title.
  • Show proof of employment. Even though the loan is secured with the pink slip, a lender will ultimately prefer payback in the form of money. This information gives the lender that you have the means to pay off the title loan.
  • Bring in a current utility bill to prove your residence. Often times a license will not have the most current address. Since utility bills are paid each month, you will need to provide the most recent one.

A bank’s application involves pages of documentation and questions to answer. The approval process may takes weeks and include an interview with the loan officer to find out more information. An auto title lender will not waste your time; as long as you bring in all the qualification information, once your car is assessed, you will know right away whether or not your application has been approved. Imagine driving away with the money in your pocket in what could be less than an hour! Fast money is simple when you use an auto title loan in Phoenix, AZ.

Residents of Phoenix have been coming to us for all their equity loan needs since 1995. Over these years, we have grown a reputation for providing fast and reliable loans to people who have been rejected by banks and other lending companies. Our loan process is hassle free and can provide you with the cash you need within twenty four hours!